The San Francisco Bay Area is an economic powerhouse. The region’s innovation industries, from high tech to biotech, helped lead California out of the Great Recession. We are near full employment in some areas, and are responsible for 53.5 percent of the state’s net job growth since 2007. And while we are home to just 17 percent of the state’s population, we pay 36 percent of total state personal income taxes at a level per capital more than double the statewide average.
Venture capital continues to stream in at higher levels than anywhere else in the country. New company-sponsored research and startup incubators spring up like mushrooms in a damp forest. Hardly a week goes by that foreign delegations don’t visit to learn how they can replicate the secret sauce of our success. Did we mention the Golden State Warriors are undefeated – 22-0 at the time of this writing.
It’s enough to make some of us in the Bay Area extremely uneasy. It’s certainly got the attention of state number crunchers that recognize the outsized role our region plays in fueling economic growth and propping up the state budget. The anxiety is not misplaced. California and its many metropolitan regions know well the vicious cycles of boom and bust.
The challenge the Bay Area faces is figuring out how to sustain its growth and gird against an inevitable downturn. It’s a challenge the Bay Area Council is confronting head on with the recent release by our Bay Area Council Economic Institute of a bold new strategy for strengthening the region’s competitiveness, broadening prosperity, and building resilience against economic swings.
The Roadmap for Economic Resilience targets key weak points to sustained growth that our economic surge has exposed. It calls for better harnessing the collective power of the Bay Area’s many parts to solve housing, transportation and workforce problems. It calls for new business practices, new governmental structures, and new mechanisms of collaboration.
The Roadmap offers a set of specific recommendations for increasing the supply of housing, bringing down the cost of building new housing, creating new models for financing and investing in transportation, wringing greater efficiency from our public transit system, streamlining decision making on regional planning issues and elevating economic factors, and strengthening connections between our higher education system and employers, among others.
Achieving any of these solutions will require bold, visionary leadership to challenge the current fragmented system in which we operate. And to overcome the detractors and critics who feel threatened by change. It will also require a new and deeper level of collaboration and partnership.
The Bay Area is made up of 101 cities, nine counties, four major regional government agencies, 26 transit agencies and dozens more local authorities responsible for everything from water, sewer and public safety. But too often, our planning and decision making stop at jurisdictional lines. That would be fine if our more than 7 million residents only lived in the cities where they worked. But more than half of all workers cross at least one county line – and even more city borders — each day to get to their jobs. A growing number are forced to commute from places as far as Sacramento and the San Joaquin Valley. Employers are struggling to attract and retain the best talent.
In many ways, these problems reflect the inadequacy of past solutions that have been designed largely to serve our fragmented system. The evidence is clear. Our housing is among the most expensive in the country, with median home prices exceeding $1 million in some places, rents rising at double-digit rates and many residents paying 40 to 50 percent and more of income to housing costs. The scramble for housing has caused widespread displacement and even contributed to worsening pockets of homelessness.
According to the state’s nonpartisan Legislative Analyst Office, the problem is largely one of simple supply and demand. In a report earlier this year, the LAO found that our regional housing deficit surpasses a whopping one million units. This problem is not unique to the Bay Area, and the LAO squarely blamed a statewide housing shortage for rising costs that consume a growing share of personal income and give California the dubious distinction of having one of the nation’s highest poverty rates.
Our transportation system is also near a breaking point. Bay Area traffic consistently ranks among the worst in the country, sapping economic productivity and polluting our skies. Our major transit systems are bursting at the seams. With declining state and federal support, we are struggling mightily to maintain the fleet we have, let alone make necessary investments to accommodate the projected addition of 2 million workers and residents over the next 25 years – the equivalent of two cities the size of San Jose.
The Bay Area is not alone in experiencing these problems. Many major metropolitan regions throughout the state are grappling with these same challenges. Part of the solution may reside in Sacramento, where policies and legislative mandates handed down to metropolitan regions don’t always align with the problems they are facing and oftentimes conflict. We’ve been gratified that several lawmakers have already indicated an interest in translating some of the recommendations into legislation.
None of our problems is beyond fixing. We need a strong sense of urgency and a healthy willingness to break from past models. Fortunately, neither the Bay Area nor California lack for those qualities. We believe the Roadmap report can serve as a starting framework for a discussion on these issues. We invite you to join us.